This Week’s Price Action
Weekly Summary:
- S&P Market continues to Grind Higher into inverse H&S Target of 2225
- DJIA Forms Cup/Handle Above Range breakout. Still targeting 18941
- RUSSEL 2K acquires it’s Inverse H&S target
In my last post (Bulls on the Goal Line)here at iBankCoin we identified the inverse H&S breakout and we were sitting just below the 2134 all time high. Wanted to update on where I see things today based on current price action.
At this point both the NASDAQ and the Russell 2k have acquired their minor upside trading targets we discussed in that report and the DJIA and the S&P still grinding into them. It is very hard in my mind to be bearish in any way shape or form when both the NASDAQ and Russell are are acquiring major upside technical targets while the DJIA and S&P 500 sitting at all time highs with bullish technicals still as a tailwind. As you will see in the rest of this report, you really have to stretch to make a case for the bears. As always that is a know your time frame thing, as it doesn’t mean we can’t see a 1% down day here and there, but the technical picture as we stand today remains quite bright.
Let’s get started looking at the price action.
S&P:
Swing Time Frame (30 min) : Bullish Cup/Handle targeting 2225 remains in motion. While it appears we will capture that target, I have drawn in pink the riskiest scenario that I can see playing out. That is some sort of topping pattern forming here using last weeks highs as a head. At this point the market continues to just slow grind into the target, but we always keep an open mind as to what is actually occurring.
Big Picture:
Big picture the trading range remains broken as the we grind into our first target of 2225. We have a 300 point cup/handle in motion as well as the smaller 30 min cup/handle. While 2225 is our first priority the measured move on the cup/handle is 2412. I have drawn out a few scenarios where we could dip back to as low as 2100 and still be thinking bullish. So from a big picture, there is very little to worry about until we see price action that wants to attack 2100 and below.
DJIA
Swing Time Frame (30 min) :
DJIA, cup/handle still in motion. Target 18941. Possible 2nd cup/handle forming out of this recent consolidation. No bearish price action to speak of and even hard to invent any here like I did above with the S&P.
Big Picture:
2 Cup/Handle setups in motion and a 3rd under construction. Our first target is 18941. However the larger cup/handle targets 20884. Very little to be bearish about with the price data we have in front of us today.
Russell:
Swing Time Frame (30 min) :
Bullish Inverse H&S acquires upside target at 1235.60
Big Picture:
Bullish Inverse H&S in motion targeting all time highs. After acquiring the minor target it is reasonable to expect some kind of profit taking type pullback, so don’t be surprised completely if we see a test of the 1180 area.
However as long as we are above this neckline drawn below, the benefit of the doubt goes to the bulls from a big picture perspective. The target here is just north of 1400 about 15% higher from here.
NASDAQ
Swing Time Frame (30 min) : Bullish Inverse H&S acquired it’s target.
Big Picture:
While it needs to still take out and hold above 5231, the all time high. We have a much larger bullish pattern in motion targeting 5728. That is Plus another 10% or so.
Breadth
Not great over the last month and starting to see some divergence as market move higher without participation, but it is hardly falling apart. Still only mid range so not really overbought or oversold.
Bulls would like to see this pick up, but it may take until after labor day when people come back from vacation.
The Bottom Line:
Let’s break down the evidence.
- Of the 4 major US Indexes that we reviewed 2 (NASDAQ and RUSSELL) have acquired their upside targets on the 30 minute time frame with the DJIA and S&P still grinding into their targets.
- All 4 have larger technical breakout patterns in motion targeting between +10 and 15% moves higher.
- It is a stretch at this point to find a bearish technical setup in the major indexes.
With the charts we reviewed and these 3 bullet points it looks like the market wants to continue higher. If and when we see price action develop that puts the market at higher risk, we will identify it in the nightly reports. However until then, there is very little evidence of anything other than consolidation for a move into the upside targets particularly in the DJIA and S&P which are yet to acquire their smaller targets.
This Week’s Chart’s in Focus:
Let’s review a few charts that I consider worthy of your attention:
Transports (IYT): Sure would be nice to see an upside resolution in this one.
Retail (XRT): Same holds true here. Would be much more bullish for the markets overall to see further rotation into retail and for this inverse H&S to resolve higher above the neckline.
Utilities (XLU): Continue to hold the trend and the Cup/Handle breakout targeting 58.75. The risk we want to watch for is what I have drawn below.
XDN.X : Japanese Yen
Cup/Handle targeting 106 remains in motion. Interesting that what is supposed to be a risk off asset keeps going higher. Certainly has my attention despite the bullish price action in the US Indexes
XOP: The oil related sector etfs all look quite similar. It will be important for this sector to breakout above the recent highs trigger this bullish inverse H&S. Target would be ~54 if it does. Keep an eye on the names within the sector as well. I have several on my watchlist.
AMZN:
This is how a Cup/handle is supposed to work. Still 30 points form acquiring it’s target, expect that to happen, then we re-evaluate.
AAPL-> Last but not least America’s darling. Using Trend lines, AAPL has broken the down trend, but in my mind this is still a lower high. It has a double bottom in motion targeting 114.31. Acquiring that target sets a higher swing high, something the stock has not done Since Feb of 2015, the beginning of it’s current top. I will be more comfortable with this one if and when it acquires the target. (i.e I will watch the 2nd pattern to form and become a buyer. It is possible the trend is changing here, but it still needs to prove itself.
